If the input market is competitive and the output market is monopolistic: A)MFCMRP. B)MFC

Question

If the input market is competitive and the output market is monopolistic:
A)MFC>MRP.
B)MFC<MRP.
C)MFC=MRP.
D)MRP=VMP.

Quizplus · Accepted Answer

DIn a competitive input market, the Marginal Factor Cost (MFC) equals the wage rate, which is also equal to the Marginal Revenue Product (MRP), hence MFC=MRP. Additionally, the Marginal Revenue Product (MRP) is equal to the Value of the Marginal Product (VMP) in perfectly competitive markets, but this equality can also apply in the context of the question as it reflects the productivity value of the last unit of input, regardless of the market structure for output.

If the Input Market Is Competitive and the Output Market